The areas of robotics and artificial intelligence will lead the next wave of disruptive technologies and one ETF taking advantage of these vast opportunities is the Innovator Loup Frontier Tech ETF (NYSEArca: LOUP).
LOUP provides exposure to the Loup Frontier Tech Index, which is a rules-based index designed to track the performance of companies with a commanding presence in future technologies, such as artificial intelligence (AI), computer perception, robotics, autonomous vehicles, virtual/mixed/augmented reality, and similar disruptive innovations.
“What’s really unique about our ETF is we’re really playing into this next wave,” said Gene Munster, Loup Ventures managing partner. “There’s always little waves going on in tech, but every 10 years or so, there’s a big wave and in the case of this next wave, it’s a combination of five things–AI, robotics, self-driving cars, augmented reality, and virtual reality.”
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LOUP is based upon the technologies deemed most likely to disrupt consumer and enterprise businesses over the next several decades, and most relevant to the frontier technology investment focus. Frontier technologies are innovations emerging from an R&D stage, and beginning to move towards mass-market commercial adoption.
Rather than focus squarely on large companies with war chests of capital to throw at research and development, LOUP also looks at smaller companies that may not compare with respect to financial resources, but can compete with their big ideas and ground-breaking innovations.
“We’re also emphasizing smaller companies–the $500 million to $5 billion market cap,” said Munster.
LOUP studied the performance of 40 tech companies and extrapolated one key metric–the propensity for growth. This provides an impetus for LOUP when it comes to selecting companies that meet this growth criteria for investment opportunities.
“Outside of Apple, over the last five years, companies that grew at greater than 20% returned an average 6x (growth) and the ones that grew less than 20% returned an average 2x,” said Munster. “This ETF really wants to capture growing tech companies that you haven’t heard of.”
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